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Dec. 2 — Justice
Stephen G. Breyer dominated U.S. Supreme Court oral argument over
state health-care databases, repeatedly asking why the federal
government doesn't do more to facilitate these efforts.

Breyer and other justices appeared convinced during
argument Dec. 2 of the value of these databases, which more than a
dozen states now use to shape health-care policy in an effort to
improve outcomes and lower costs. He pressed counsel about why
states have developed varying standards for data collection—which
arguably creates administrative and financial burdens for health
plans—rather than petitioning federal agencies such as the Labor
Department to facilitate a more uniform system.

These so-called all-payer claims databases, which
more than half the states have either implemented or are
considering, collect information from parties that pay for medical
services—such as insurance companies—about services provided to
state residents. Proponents of the databases—including the DOL,
which filed a brief and argued before the court—consider them a
crucial tool in states' efforts to improve public health, control
costs, aid research, provide transparency and foster competition
among medical providers (229 DLR C-1, 11/30/15).

Critics, including the insurance company that
brought the instant lawsuit against Vermont's program, say the
databases burden health plans by forcing them to comply with
varying and expensive state requirements. They also claim the
programs are preempted by the Employee Retirement Income Security
Act, to the extent that they apply to employers that fund their own
health plans.

These data collection efforts hit a major roadblock in 2014, when the U.S. Court of Appeals for the Second Circuit barred Vermont from forcing employers that fund their own health insurance plans to turn over the required data. In a split ruling, the Second Circuit found that Vermont's attempt to collect data from self-funded plans encroached on the core functions of ERISA and was therefore preempted by the federal law.

Carmel Shachar, a clinical instructor at Harvard Law School’s Center for Health Law & Policy Innovation who filed a pro-database amicus brief, said the justices’ line of questioning was colored by recent high-profile decisions involving the Affordable Care Act, such as King v. Burwell. In that ruling in June, the high court upheld the availability of tax subsidies under the ACA to individuals who purchase their health insurance on the federal health-care exchange.

In those cases, the justices “were really grappling
with, ‘what is the role of the federal government when it comes to
health care?’ ” Shachar told Bloomberg BNA. “Certainly Vermont
argues that health care is considered a very traditional province
of the states, and you see pushback that you may not have seen even
a few years ago on whether health care is a classic area of state
concern or whether it's more of a federal-state hybrid.”

‘No Doubt.'

Sounding supportive of all-payer claims databases,
Breyer said there was “no doubt” that states should have access to
the information sought by programs like Vermont's. However, he
noted the administrative and financial burdens of complying with up
to 50 state databases and asked why the states didn't take a more
uniform approach.

Specifically, Breyer queried why the states have
chosen to create their own, differing databases, rather than
petitioning federal agencies such as the DOL or the Department of
Health and Human Services to adopt regulations allowing for a
uniform system of claims data reporting. Breyer suggested that such
a regulation could solve any ERISA preemption concerns while
reducing the burden of compliance for employers and other entities
that pay medical benefits, such as insurance companies.

“I think there are probably 100 or 200 people in the
Department of Labor and HHS that could write regs that reconcile
these problems and allow both,” Breyer said. “But I can't, because
I'm a judge.”

Ian Samuel, an attorney with Jones Day’s New York office who filed an amicus brief on behalf of the American Hospital Association, said Breyer's comments in this regard underscored that everyone speaking at the oral arguments appeared to take the public value provided by these databases as a given.

Samuel credited these databases with helping
providers provide better quality care, managing costs and improving
services to particular populations that aren't well-served by the
existing health-care system. That databases like Vermont's could
promote these policy goals “seemed to be taken as a given by just
about everybody,” Samuel told Bloomberg BNA.

Samuel spoke favorably but cautiously about Breyer's
suggestion for federal action in this arena.

“To the extent that all-payer claims databases are
very useful for Vermont, they're very useful for the whole country.
So to the extent that they could be promoted and standardized by
federal action, that would be great,” Samuel said.

However, he cautioned that “the devil is in the
details.”

Echoing these points, Harvard Law's Shachar
emphasized the potential for improving health care that these large
claims databases offer.

“Now that we have the computing power to really
tackle big data problems, the bigger the data set, the better, and
the more things they can do with it,” Shachar said. “I think that
everybody would be happier to have some sort of nationwide system
collecting the data and really presenting it in a uniform format
across states. Since DOL and HHS have chosen not to act on that, I
think there is a real need for this data, and you can really only
get it from those regulations that require everybody to
report.”

Breyer's call for federal action received fairly
mild pushback at the argument, with Justice Antonin Scalia asking
the Vermont solicitor general, Bridget C. Asay, whether the DOL
truly has the authority to require uniformity from the state
databases. Seth P. Waxman, the Washington-based WilmerHale partner
who argued on behalf of Liberty Mutual Insurance Co., which brought
the instant lawsuit, also questioned the DOL's authority to
eliminate ERISA preemption concerns through regulation.

Justice Elena Kagan raised a different concern,
asking whether the uniformity proposed by Breyer would compromise
the value added by allowing states to experiment with different
types of databases.

Debating Burden

Although the justices and counsel spent little time
debating the merits of all-payer claims databases, they devoted
much more attention to whether these databases significantly burden
employers and other entities that must report data.

In particular, Chief Justice John G. Roberts asked
John F. Bash, assistant to the U.S. solicitor general, about
whether the cost of compliance ultimately would be borne by the
workers receiving health insurance.

“You don't think 50 different regimes of reporting
is going to require a significant diversion of money away from
benefits to administration?” Roberts asked Bash.

Kagan also appeared interested in the burden posed
by compliance, saying it was “intuitive” that these various
reporting requirements created administrative and financial burden.
However, Kagan pressed Waxman for concrete data about the burden
imposed by these databases, saying it was largely missing from the
judicial record.

Justice Sonia Sotomayor's comments suggested that
she was less inclined to see the databases as significantly
burdensome, asking whether the requested data were standardized and
available electronically. Asay contended that it was, arguing that
the data sought by Vermont and other states was largely
standardized to comply with the Health Insurance Portability and
Accountability Act.

Asay and Waxman disagreed over the extent to which
Vermont and other states sought data already in the possession of
the entities responsible for reporting. While Asay argued that this
data were regularly collected by third-party administrators in the
ordinary course of business, Waxman disputed that notion and
emphasized that specific types of plans—such as multiemployer plans
covering union workers—typically collect only 70 percent to 80
percent of the data sought by Vermont.

Kathryn Wilber, senior counsel for health policy
with the American Benefits Council in Washington, attended the
argument and called it “heartening” that the justices spent so much
time discussing the burdens associated with reporting to various
state databases.

“I think what doesn't get mentioned enough in this
debate is that while insurers may collect some of that data or
maybe a lot of it, every state's requirements are a little
different and sometimes a lot different,” Wilber told Bloomberg
BNA.

Wilber pointed specifically to variations in whether
nonresidents are counted in a state's database, saying these small
differences could require changes to systems or even manual
reporting.

“Those costs are ultimately borne by the plan
sponsor and the plan participants,” she said. “I think that doesn't
get enough attention sometimes when you talk about what is this
burden exactly.”

The American Benefits Council filed an amicus brief jointly with several other employer groups supporting Liberty Mutual.

‘Very Troubled.'

Turning the discussion to more technical, legal
questions, Justice Samuel A. Alito expressed skepticism at
Vermont's argument that its database sought information about
medical claims, which differ meaningfully from the type of
financial information ERISA requires plans to report. According to
Vermont, this difference counseled against finding the state's
program ERISA-preempted.

Alito appeared to disagree with this
characterization, pointing out that the ACA amended ERISA to
require reporting of medical claims data.

Alito said he was “very troubled” by this fact,
suggesting that he may be inclined to find these state databases
partially preempted based on the recent ERISA amendments contained
in the ACA.

To contact the reporter on this story: Jacklyn Wille
in Washington at jwille@bna.com

To contact the editor responsible for this story:
Jo-el J. Meyer at jmeyer@bna.com

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